US regulator fines two Canada funds, broker for natgas trades

28 January 2010 23:00  [Source: ICIS news]

HOUSTON (ICIS news)--Two Calgary-based limited partnerships and a Toronto-based broker have each paid $250,000 (€178,000) to settle charges over pre-arranged trading in NYMEX natural gas futures in 2006, the US Commodity Futures Trading Commission (CFTC) said on Thursday.

The Canadian limited partnerships, called Pinemore and Birchmore, have substantially the same ownership, the CFTC said in a statement. It did not identify the owners.

"The trades were part of a strategy involving the purchase and sale of the same quantity of NYMEX natural gas futures contracts by Pinemore and the opposite sale and purchase of the same quantity of NYMEX natural gas futures contracts by Birchmore," the regulator said.

It did not say how or whether the partnerships benefited financially.

In a separate but simultaneous statement, the regulator said Scotia Capital, a subsidiary of major Canadian financial institution Bank of Nova Scotia, acted as a broker in such trades.

Although that statement notably did not explicitly link Scotia Capital to Pinemore and Birchmore, the size of the fine, the time period of the trading and the language used to describe it was identical to the first statement.

A spokesman for the CFTC was not immediately able to comment on whether the two cases were linked or on the ownership of the limited partnerships.

The New York law firm that represented Scotia, Sullivan & Cromwell, referred inquiries to a Bank of Nova Scotia spokesman, who declined to comment.

The CFTC has levied fines to settle dozens of cases involving irregular energy market trading in the last few years, amid steady pressure from the US Congress, the chemical industry and others to rein in market manipulation.

($1 = €0.71)

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By: Stephen Burns
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